Lawsuits Put the Spotlight on Hiring of Interns

An internship at Harper's Bazaar might seem like a high-profile passageway into a career in mass communications. It is, after all, one of the top women's fashion magazines with a circulation of more than 700,000, and work experience there is guaranteed to stand out on any résumé.

But in a class-action lawsuit filed in February, a woman who worked for Harper's Bazaar last year as its head accessories intern complains that her employment violated the wage-and-hour provisions of the Fair Labor Standards Act because she was not paid for her work. Xuedan Wang says in her lawsuit against Hearst Corp., which publishes the magazine, that she regularly worked more than 40 hours a week.

"Unpaid interns are becoming the modern-day equivalent of entry-level employees, except that employers are not paying them for the many hours they work," the lawsuit says.

The case is one of three proposed class actions involving unpaid internships that have been filed in recent months against media companies. Fox Searchlight Pictures, a film production company, and talk show host Charlie Rose are the other employers who have been sued by former interns. The plaintiffs are seeking unpaid minimum wages, overtime pay and damages.

Employment law experts say the cases, which have followed a U.S. Labor Department crackdown on internships, could help to clarify when an intern should be paid. "It really isn't clear what the parameters are," says John Thompson, a partner in the law firm Fisher & Phillips in Atlanta.

The Labor Department follows a six-part test that is based on a 1947 U.S. Supreme Court decision. It says, among other things, that an unpaid internship must be "similar to training which would be given in an educational environment," must be "for the benefit of the intern," and the intern must not "displace regular employees." But courts have not uniformly deferred to the Labor Department, even fashioning their own legal standard in cases involving trainee radiologists, firefighters and flight attendants.

"Under current federal law, it is often difficult to tell whether an internship is illegal," one commentator notes in a law review article.

Hearst Corp. has said that its internships "are designed to enhance the educational experience of students," who get academic credit, while Fox Searchlight says it did not illegally classify employees as interns.

Internships have long been a way for college students to acquire "real world" workplace experience. During the current economic recession, with job openings more scarce and employers seeking to cut costs, the number of internships has soared. In 2008, the National Association of Colleges and Employers found that 50 percent of graduating students had held internships compared with 17 percent in a 1992 study by Northwestern University.

This trend has not gone unnoticed by regulators. In April 2010, the Labor Department's Wage and Hour Division published a fact sheet notifying employers that "Internships in the 'for-profit' private sector will most often be viewed as employment" unless they met the six-factor test.

A top Wage and Hour Division official made clear that the test would be interpreted narrowly. "If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law," deputy administrator Nancy Leppink warned.

The new class-action lawsuits—all of which were filed in New York federal and state courts by the law firm Outten & Golden—allege that by misclassifying workers as interns, employers denied them "the benefits that the law affords to employees, including unemployment, workers' compensation insurance, Social Security contributions, and, most crucially, the right to earn a fair day's wage for a fair day's work."

Wang's duties at Harper's Bazaar, she says, included coordinating pickups and deliveries of clothing samples and assisting in photo shoots. Former intern Lucy Bickerton, who sued Charlie Rose and his production company March 14, says she did research to prepare him for guest interviews, assembled press packets and greeted guests.

Cathy Ruckelshaus, legal co-director of the National Employment Law Project in New York, says she believes the class actions could have a big impact on the internship issue, in part because they have high-profile defendants.

"Any time you have an employer with name recognition, the word gets out," she says. Courts, she says, could focus on whether the intern "was really doing the core work of an employee" or just "apprenticing on the job."

For now, the murky state of the law means that hiring interns may be a risky endeavor for even the best-intentioned of employers, Thompson says. "Absent some fairly quick, specific and authoritative guidance from the courts and/or enforcement agencies, I think we're going to see a significant diminution in the number of internships," he says.

Matthew Heller is a freelance writer and editor from Los Angeles. To comment, email editors@workforce.com.

Planning to hire an intern this summer? College recruiting and consulting firm Intern Bridge has several studies and fact sheets online related to hiring an intern.

In addition to its book Total Internship Management, Intern Bridge now offers several additional publications. There's Supervisor's Handbookand a Managing Millennials publication, in addition to an updated Salary Report, which is based on the company's research. It also has released a second publication designed for college students titled The Job Coach.